State News

House passes scaled-back version of gasoline tax break

By The Associated Press
Monday, February 26, 2007 9:18 PM EST

INDIANAPOLIS - Motorists would get a tax break on gasoline in Indiana if the pump price exceeds $2.25 per gallon under a bill passed by the House on Monday.

House Democrats had campaigned on a proposal to eliminate the state sales tax on gasoline. They did regain control of the chamber and have a 51-49 majority.

But they abandoned that proposal earlier this session, saying it would have cost the state too much in lost revenue to eliminate the tax. The original proposal would have cost the state between $328 million to $362 million, according to the Legislative Services Agency.

Under the current bill, the state's 6 percent sales tax would apply up to a total pump price of $2.25. If prices are higher than that, motorists would not have to pay sales tax on the difference between the higher price and $2.25.

LSA estimates that this bill could cost the state between $37 million and $45 million.

Although many Republicans voted for the bill, they accused Democrats of scaling back their campaign pledge so drastically after the election.

Rep. Jeff Espich, R-Uniondale, said the campaign proposal was fiscally irresponsible. But, he said, ‘‘A promise made should be a promise kept, and this is only 10 percent of what was promised.''

Rep. Dennie Oxley, D-Milltown, said it would still help protect motorists in Indiana from the volatility of gas prices.

The bill now goes to the Republican-ruled Senate.

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